Two
weeks ago today I pushed a couple of keys on a laptop to
start 55 new wind turbines turning.

That was at
TrustPower's Tararua wind farm in the Manawatu - now the
largest in the southern hemisphere.

Today I get to start
up 155 megawatts of diesel generation.

There's a stark
contrast for you.

Yet both projects make sense for New
Zealand.

Both will add to the security of the nation's
electricity supply.

And both are in important ways the
result of government energy policies that drive, overall,
towards an electricity system that is both secure and
sustainable.

TrustPower's windfarm was expanded this year,
rather than some years down the track, because it received
carbon credits from the government.

Electricity from those
wind turbines will displace generation that otherwise would
have come from gas or coal, so they will reduce New
Zealand's future greenhouse gas emissions.

That reduces
the number of carbon credits the government needs to cover
future emissions, so we pass on that saving.

The value of
those credits on the international carbon market made the
project viable for TrustPower.

We all win from
that.

TrustPower grows its business. New Zealand gains
some more clean, renewable energy. Electricity consumers
get a more secure supply of power.

This power station is
complementary to those wind turbines in the Manawatu.

The
wind doesn't always blow. The rain doesn't always
fall.

We've been reminded, all too painfully, of how
vulnerable New Zealand is to the effect that a very dry
period can have on our electricity system.

The power
shortages of 2001 and 2003 were not just inconvenient, they
were expensive, damaging to the economy and damaging to New
Zealanders' confidence in the security of their electricity
supply.

This government decided that the problems in those
two years went deeper than the weather, to the structure of
the industry.

We decided that New Zealand needed an
electricity system that copes better with extremes.

And
part of the solution is to have more reserve generation to
run in very dry years.

This power station is an
insurance policy.

We hope we won't have to run it too
much. We'll switch it on today, but it won't stay on.

And I'll be happy if we don't have to switch it on for
the rest of the year, because that will mean the electricity
system isn't under stress.

This station will run only when
the limits of the electricity system are tested by problems
like low inflows to the hydro lakes, or perhaps a major
generation or transmission breakdown.

It's like the torch
you have handy in case of a power cut - except that it's the
station that could stop that power cut happening.

The
government has paid for this plant to be built precisely
because we do not expect it to run often.

Electricity
generators are in business, and it is not part of their
normal business to build plant that will not run often
enough to pay for itself - even if the country needs
it.

This was one of the failures of the electricity
market.

I said before that building more reserve
generation was part of the solution.

That's a very
important point.

Every now and then I am confronted by
people who insist it is a mistake to think that reserve
generation capacity by itself is the answer to dry year
risk.

They are quite right.

We need better management of
existing generation assets, to get the most out of
them.

We need new investment in baseload generation.

And
we need more opportunities for electricity users, large and
small, to shift or moderate their consumption in ways that
make economic sense for them and for the system.

New
Zealand needs all of these things to happen, and that is
what Government electricity policy is designed to
deliver.

The agency charged with putting that policy into
action is the Electricity Commission.

The Commission's
basic role is the unglamorous but essential work of
day-to-day governance of the electricity industry.

It also
has a rather long and specific list of improvements to make
to the way the industry operates, set out in a Government
Policy Statement on Electricity.

These include providing
reserve energy for dry years - perhaps through commissioning
more plants like this, but by other means as it sees
fit.

This part of the Commission's work, because of its
novelty, is often mistaken for its only role, or its most
important.

In due course though, I think it will be
understood as no more nor less important than many of its
other tasks.

The problems that have emerged with the
national grid in the upper South Island in the past week
have shown, for example, how important the Commission's role
in decisions on transmission investment will be.

The
Commission has the difficult challenge of dealing with the
smallest details of the electricity industry while keeping
sight of the big picture.

For the government the big
picture is sustainable development and what that means for
the energy sector.

We have a Sustainable Development
Programme of Action, published early last year, which
identifies energy as a central issue.

The Ministry of
Economic Development - currently the owner of this plant -
is leading some very useful policy work, across government,
on a framework to guide our thinking on sustainable energy
into the future.

You don't have to go far into questions
about what a sustainable energy future looks like before you
find questions multiplying in front of you, reaching into
all corners of our lives.

We consume energy like we
breathe air, and the results range from global climate
change to the smog of a cold night in Christchurch.

A
framework for thinking about sustainable energy policy
issues will help us integrate energy policies more
effectively.

The work is going well and I look forward to
having something more to say about it later in the
year.

For today, we have a bit of concrete and steel
reality to deal with, and I want to thank all those who have
helped put it in place.

This plant is a real credit to the
project team, who have worked to a very tight schedule.
Most plants of this size would take at least a year to
complete. To have got to opening day in only eight months
is a highly impressive achievement.

I particularly want to
acknowledge the constructive approach taken by Contact,
which has been positive and flexible through the whole
process. Thanks in particular to Steve Barrett and project
manager Tom Zink who has put in long hours to make today
possible.

Thanks also to the Ministry of Economic
Development who have managed construction on behalf of the
Crown. Particular thanks go to David Smol and Roger
Fairclough for their fine efforts.

And providing the Crown
with technical support has been Sinclair Knight Merz, in
particular Eamonn Morrisey. Thank you for that.

Finally I
thank Pratt and Whitney, who have been the principle
contractor for the supply and installation of this power
station that you will see more of on your tour shortly. In
particular I acknowledge the fine work of Peter Christman,
Chuck Levey and Larry Pitts.

You can all take great pride
in what you have achieved today.

As for myself, I think
today is probably the closest I will ever get to firing up a
jumbo jet.

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